Introduction to the Travel Industry

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     The global travel industry is comprised of a wide variety of businesses, from hotels and inns to casino resorts, trains, buses, airplanes, cruise ships, tour operators and travel bookers, both online and physical.  
The Coronavirus epidemic that began in 2020 had a dramatic impact on the travel and tourism industry, decimating traffic, deterring passenger and guest revenues and leading to immense financial challenges.  Many national governments stepped up with bailouts, loans and other financial support.
The World Travel & Tourism Council (WTTC) found that the global travel and tourism industry supported 272 million jobs on a direct basis during 2020 (down from 334 million in 2019).  The industry generated $4.67 trillion in total (direct and indirect) global contribution to GDP (gross domestic product), down from $9.17 trillion in 2019.  Business travel spending was off 61%, while leisure spending was down 49.4%.
Many airlines around the world took bankruptcy during 2020, while others received massive government bailouts.  Unfortunately, those bailouts may not be anywhere near enough to keep some airlines in business.  Meanwhile, the entire industry has curtailed flights and announced massive employee layoffs.
While considering the devastating year that the travel industry had in 2020, it is worthwhile to look back at 2019, which was a boom year for virtually all travel sectors.  In most parts of the world, prior to the Coronavirus, hotels and resorts had been enjoying good to excellent occupancy rates, which enabled them to raise prices, while many new properties have been built or are under construction in promising markets.  Business travel had grown substantially in recent years, while leisure travel had been generally strong worldwide.  Nonetheless, when middle class consumers did take a vacation, it was generally on a carefully watched budget.  At the same time, affluent travelers were spending money freely on luxury hotels, resorts and experiences.
Prior to the Coronavirus, businesses were sending growing numbers of employees on trips, to conferences, company-wide events and client meetings.  At the same time, companies were keeping a tight rein on costs.  Corporate travel managers were negotiating reduced hotel and airfare rates, while relying on advanced software to help manage and track employees’ travel expenses.  A growing number of business travelers were relying on as a lower-cost alternative to traditional hotels.
Airlines in many parts of the world were enjoying high occupancy rates and excellent profits.  Airlines are flying aircraft that are much more fuel-efficient than those of a few years ago, and they have streamlined operations in all departments so that their staff levels are more efficient  It is also vital to note one additional shift in airline strategy:  today, they rely heavily on fees for services such as checked baggage, seats with extra legroom and on-board food.  This contributed substantially to profitability.
Advanced new aircraft are bringing significant changes in the global airline industry.  For example, Boeing’s highly advanced 787 enables airlines to offer great enhancements to passenger comfort with extremely long intercontinental range, while the airlines benefit from a fuel efficiency boost of about 20%.  Airbus competes with similarly efficient, long-haul aircraft.
Perhaps more important was the spectacular demand from global airlines for single aisle planes to replace older models that are not particularly fuel-efficient.  Enormous numbers of such aircraft were on order from both Boeing and Airbus before the pandemic.
Discount airlines remain very important players in the U.S. as well as the rest of the world.  Outside the U.S., good examples include Cathay Dragon (formerly Dragonair) in China and Ryanair in Europe.  Norwegian Air Shuttle has been competing fiercely with low airfares from Europe to the U.S. and elsewhere.  However, the Coronavirus battered the company’s finances.  Meanwhile, legacy airlines (e.g. American Airlines and British Airways) are now competing head-to-head on price with discount airlines in many cases, typically for the least-desirable seats in economy class.
E-commerce continues to play an extremely important role in the travel sector, making booking convenient for consumers who want to compare costs and services across multiple airlines or hotel properties at once.
The cruise line business enjoyed solid growth before the Coronavirus pandemic.  Consumers saw cruises as high-value, all-inclusive package deals, and cruise ships were nearly full at all times.  Some of the newest ships, such as Royal Caribbean’s “Allure of the Seas” are among the largest passenger ships ever built.  However, it was one of the most severely impacted industries do to the pandemic, as rampant passenger illness on a handful of ships gained news worldwide, and virtually the entire industry was shut down for several months.